Key Takeaways
- AVGO shares reached an all-time closing high of $481.57 on Tuesday, gaining 4.7% in the session
- Jensen Huang’s endorsement of Marvell as a future trillion-dollar company boosted sentiment across custom chip designers including Broadcom
- Alphabet’s $80 billion equity raise for AI spending directly benefits Broadcom, which designs Google’s TPU chips
- Analysts forecast Q2 adjusted earnings of $2.40 per share on $22.1 billion in revenue, representing 47% year-over-year growth
- The company aims to reach $100 billion in AI chip revenue by 2027
Broadcom (AVGO) shares touched a new all-time high on Tuesday, entering Wednesday’s quarterly earnings announcement riding a powerful four-day winning streak that delivered 14% gains.
Shares settled at $481.57 on Tuesday, climbing 4.7% to set a fresh closing record. During Wednesday’s premarket session, the stock added another 2.8%.
Tuesday’s strong performance stemmed from two distinct developments, both reinforcing the same narrative: artificial intelligence infrastructure spending is accelerating, and Broadcom stands directly in its path.
The initial trigger came from Nvidia CEO Jensen Huang during his appearance at Taiwan’s Computex conference. Huang offered strong public support for competing chip designer Marvell Technology, declaring the company “going to be the next trillion-dollar company.” With Marvell currently valued around $192 billion, Huang’s statement suggests potential gains approaching 400%.
Nvidia recently acquired a $2 billion position in Marvell through a strategic alliance. While Huang didn’t specifically reference Broadcom, the companies compete head-to-head in custom data center chip development. His bullish comments created positive momentum throughout the sector.
The second catalyst emerged from Alphabet, which revealed plans for an $80 billion equity issuance dedicated to AI capital spending. The tech giant anticipates deploying up to $190 billion this year, with capital expenditures expected to “significantly increase” through 2027.
This development carries immediate significance for Broadcom. Google ranks among its six custom chip clients, and their collaboration spans more than ten years. Together they’ve developed eight successive generations of Google’s Tensor Processing Units — the TPU architecture powering Google’s AI operations.
AI Chip Sales Experience Explosive Growth
Broadcom’s AI chip business generated $8.4 billion during the first quarter — a 100% increase from the prior year — spanning both custom computing processors and networking components. Management has established a goal of achieving $100 billion in AI chip sales by 2027.
Analyst estimates call for Q2 adjusted earnings of $2.40 per share, up from $1.58 in the year-ago period. Revenue projections stand at $22.1 billion, marking 47% year-over-year expansion. Both figures would represent company records.
Considering the growth trajectory, market participants will scrutinize third-quarter guidance carefully. Revenue and profit expansion are anticipated to maintain their acceleration throughout the remainder of the year.
Software Division Taking Secondary Role
Broadcom’s software operations, assembled through strategic acquisitions designed to offset semiconductor cyclicality, now occupy a diminished position. Software represented 42% of total revenue last year. Projections indicate this proportion will decline to approximately 20% next year as AI chip sales take commanding leadership.
Analysts still anticipate roughly 11% software revenue growth in Q2, indicating the segment isn’t contracting — it’s simply being outpaced by explosive chip growth.
AVGO has surged 87% over the trailing twelve months. The Nasdaq Composite has advanced just under 40% during the same timeframe. Broadcom’s market capitalization has exceeded $2 trillion, positioning it as the world’s seventh-largest publicly traded company.
The company reports earnings Wednesday afternoon.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
